Although we don’t believe in timing the market or panicking over market movements, we do like to keep an eye on changes — just in case they’re material to our investing thesis. The Straits Times Index (SGX: ^STI) has managed to inch up by 0.39% to 3,224 points today with 19 of its 30 constituents logging gains. Let’s take a closer look at two of those 19 market-beating blue chips. First up we have ComfortDelGro Corporation Limited (SGX: C52), which is up 1.19% to $2.56. The land transport giant is slated to announce its third-quarter results on 13 November 2014….
Although we don’t believe in timing the market or panicking over market movements, we do like to keep an eye on changes — just in case they’re material to our investing thesis.
The Straits Times Index (SGX: ^STI) has managed to inch up by 0.39% to 3,224 points today with 19 of its 30 constituents logging gains.
Let’s take a closer look at two of those 19 market-beating blue chips.
First up we have ComfortDelGro Corporation Limited (SGX: C52), which is up 1.19% to $2.56. The land transport giant is slated to announce its third-quarter results on 13 November 2014.
For the first six months of 2014, ComfortDelGro had seen healthy growth in its business with its top-line growing by 10.6% year-on-year to S$1.967 billion and its bottom-line increasing by 9.8% to S$139 million.
In its second quarter earnings release, the company gave some outlook for the rest of the year and investors might be happy to know that higher revenues were expected throughout most of its business segments. Nonetheless, ComfortDelGro did warn of cost pressures, so investors might want to keep an eye on that front when the company reports its third quarter results in the next two weeks.
Another thing investors might want to track would be the growth of ComfortDelGro’s business in China. As my colleague Chin Hui Leong pointed out a while back:
“[T]here are currently more than 160 cities in China that have a population of 1 million or more; for some sense of scale, Singapore’s population stands at around 5.3 million currently. To add to this, more than half the population in China (that works out to be 700 million people) now resides in cities.
These are all potential customers for ComforDelGro to serve.”
With China accounting for just 5.9% of ComfortDelGro’s revenue back in 2013, there is some significant opportunity in that giant country for the company to tap into in the future.
SIA Engineering Company Limited (SGX: S59) is next in line with its shares climbing 1.31% to S$4.63. The company, which is a subsidiary of full-service carrier Singapore Airlines Ltd (SGX: C6L), would be releasing its second quarter results soon on 4 November 2014.
The aircraft maintenance, repair, and overhaul (MRO) outfit did not have a particularly enjoyable first quarter when it saw a 22.5% year-on-year decline in quarterly profit to S$53.5 million despite having a slight 1.6% uptick in revenue to S$294.1 million.
In its first quarter earnings release, SIA Engineering warned that its outlook “has become more challenging with the decline in heavy checks and reduction in engine shop visits.” The company also added that “[r]ising business costs will exert increasing pressure on margins.”
But, investors might be able to find some solace in the fact that SIA Engineering did stress that managing its costs “remain[s] a priority.”
To drive growth in the business, SIA Engineering is looking toward collaborations with strategic partners. Back in July, the company inked a deal with airplane manufacturer The Boeing Company to set-up a joint venture to provide fleet management and maintenance services in the Asia-Pacific region. Investors might want to keep an eye out on discussions, if any, by management on how the JV is doing and if there are any similar deals in the pipeline in the upcoming second quarter earnings release.
There has been chatter regarding aircraft manufacturers muscling into the MRO space themselves. For instance, Temel Kotil, Chairman of the Association of European Airlines, recently commented that “In the long term, the MRO market will be dominated by the OEM [original equipment manufacturers] monopolies.” As such, SIA Engineering’s future may be more secure if it is able to strike more deals which are similar to the aforementioned one it has with Boeing.
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The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. Motley Fool Singapore writer Chong Ser Jing does not own shares in any companies mentioned.